Rural Housing Targets

Richard Holden Excerpts

Wednesday 29th January 2025 Westminster Hall

[Mr Richard Holden (Basildon and Billericay) (Con)]

This is exactly the issue facing my constituency, where two proposed large developments are going through planning, one on Wash Road on the outskirts of Noak Bridge, and the other—it went through a couple of weeks ago—on Laindon Road in Billericay. There are huge pressures on local services; local primary schools are overflowing. When we see our local authorities changing from two-tier to unitary and being moved around, there is real concern that section 106 money will not even go towards the needs of the communities having housing imposed on them. Does my right hon. Friend agree that that adds extra complexity to the situation?

[Damian Hinds]

I agree with my right hon. Friend, who has done an outstanding job of highlighting such points, including on the Floor of the House, to the benefit of his constituents.

It is also important to pay attention to maintaining the character of areas. We talked in the past about urban sprawl, but increasingly we face the risk of rural sprawl, with ribbon developments that lose the distinction between settlements. In addition to a beautiful landscape, my constituency has an important cultural heritage, as the home of Jane Austen. That is important not only to people who live in East Hampshire but to many who visit from elsewhere in the country and from abroad.

On the new formula, the Government need an overall 50% uplift in housing numbers, but in many areas they will increase by a lot more. East Hampshire is one: our target will increase from 575 to 1,142, or 98%—let us just call that doubling. That is not unusual. Colleagues will have seen that the Library paper looked at 58 mainly or largely rural local authorities and found that all had had an increase, two thirds had had one above 50%, and the average increase was 71%.

Meanwhile, in urban areas, increases are much lower—more like 16% or 17% on average. Quite a few places will see a reduction, including large parts of London and Birmingham. The Library analysis found that 37 out of 41 local authorities with a decrease were urban. I want to stress that this is not about a north-south divide; it is specifically an urban-rural divide. The County Councils Network has helpfully provided figures showing the difference in county areas. Compared with the south-east, the north-east, north-west, and Yorkshire and the Humber have much higher average increases, albeit from a lower base.

It is also important to note that this is not about correcting an historic mistake. People might think that not much building has happened in the countryside in the past, but looking back over 20 years, the rate of building—the number of additional dwellings relative to the existing dwellings per thousand households—has been higher in predominantly rural areas than in urban areas.

That shift from urban to rural is a problem for multiple reasons. One of them is a big theme today: economic growth. I am sure the Minister has a lot of time for the think-tank the Resolution Foundation. Its analysis is that tilting development towards cities, because of the agglomeration effect and other factors, makes a material improvement to growth prospects. It is also important for another theme of the day. We talk about airport expansion and the tension between economic growth and decarbonisation. When housing moves towards the countryside, that is bad for decarbonisation, because the numbers are so high that houses have to be put everywhere and it is not possible to focus on the relatively small number of places that have good strategic transport links. That hardwires reliance on the motor car, which in constituencies such as mine means two cars per couple in a household.

Why does the formula do that? We do not have the time to explain. We would need whiteboards, Excel and possibly PhDs to go through this subject—you might already have a PhD in this subject, Ms Jardine; I do not want to suppose otherwise. Various changes have been made to the formula, in particular the multiplier that gets applied to the affordability calculation, which has risen from 0.6 to 0.95. That means that the affordability calculation does a lot more work, and is more important than it was before.

No calculation of affordability of housing is close to perfect. There are all manner of problems with trying to make such a calculation. In particular, with the formula that we use today, there is a proper debate to be had about the balance between workplace earnings and residency-based earnings. Sometimes we talk about a choice between the two, but I think they are both relevant to the affordability of housing. It is also about the distinction between earnings and income, and whether we are really comparing types of housing like for like.

As I say, this is not the place to discuss those issues in detail; it is not possible in a debate format. However, I will say to the Minister that I am sure the formula looked logical when it was done on paper or a computer screen, and I am sure it was done for the right reasons, but in practice it has delivered perverse outcomes, which will reduce housing development in urban areas and harm growth, and it will be extremely difficult to deliver—certainly, it will be impossible to deliver sustainably in the countryside. The formula is an errant, rogue algorithm. We know what that feels like because it happened when we were in government, too; it can happen to anyone. The important thing is to address it as quickly as possible once it is spotted. Whatever their intent was, given the outcome, I ask the Government to look at the formula again.

The second issue is that the formula does not encourage enough of a change in the mix towards homes that are actually affordable. I will say what I mean by “actually” in a moment, but first I want to note the good work of my constituent, Nick Stenning, who has helped me in this area. We want more affordable homes, but when constituents come to my surgery and say that they want housing to be more affordable, they do not mean it in the sense the public sector means it, which is what I call Affordable with a capital A—the very strict definition of housing association rent, council rent and part ownership. They just want a home they can afford. Of course that includes those types of tenure and rent, but young couples overwhelmingly aspire to own their home, and we should be in the business of helping them to do that.

All other things being equal, for a developer, the best economic returns come from larger, costlier houses. When we consider that there is a premium on new build homes anyway, that means that, paradoxically, in spite of the economic theory, when we add more homes, the median price increases because we are adding them in the top half of the distribution. We then get a cycle that ends up calling for more of the same. We say, “Well, this area is now even less affordable than it was before, so we need more houses,” and we get more of the same homes. That is not entirely true, of course—there is a mix, but it is disproportionately weighted towards four or five-bed executive homes. I ask Ministers to look again at that; I am sure we have the same objective in this regard.

The third and final area I want to cover is specific to my constituency. It applies to a lesser extent in other areas with so-called national landscapes, but there are literally only one or two areas in the country where it applies to quite the extent it does in mine. The South Downs national park is an unusual national park: it is England’s newest, but it is by far the most populous. Its population density is about 3.5 times that of the Lake District national park, which has the next most dense population. It has huge swathes of open countryside but also significantly sized settlements, one of which is Petersfield in my constituency. Alton, which is outside the national park, is a similar size to Petersfield. They are both historic market towns and many of the people living there have the same needs and objectives, but they are treated completely differently from a housing development point of view.

There would be no point in having national parks if they did not have special protection, but the problem I have is that so much of my district—57% of the land area—is inside the national park. We have to calculate the housing need on the basis of the entire area, but that need has to be accommodated overwhelmingly in the area outside the national park. When there is a change—for instance, the number has just gone up—but the numbers that can be accommodated inside the national park do not change, we get a magnified, leveraged effect in the parts of the district outside the national park.

We would not expect development to be in proportion to landmass; otherwise, there would be an awful lot more building in, for example, the constituencies of the hon. Members for Caithness, Sutherland and Easter Ross (Jamie Stone) or for Hexham (Joe Morris). Other things being equal, we would expect it to be broadly in proportion to the existing development and existing population. In the district of East Hampshire, the South Downs national park accounts for 27% of the population and, since the national park came into existence, it has accounted for 15% of the housing development. However, with the change in targets, and without that much changing in what the national park is planning to do, it will account for 8% of the housing development, as against 27% of the existing population.

That fact creates particular pressures just outside the boundary of the national park, in places such as Alton, Holybourne, Four Marks and Medstead—all the way along the A31—and in the south of the district around Horndean, Clanfield and Rowlands Castle. There is already an imbalance between housing affordability inside the national park and housing affordability outside it, as was demonstrated by the bespoke analysis that the Office for National Statistics kindly produced. That imbalance will widen over time, and that has implications for the age mix of people living inside the national park, and therefore for the viability of schools, churches, shops, pubs and so on.

[Mr Holden]

My right hon. Friend is being very generous in giving way. My question touches on that point about the balance between urban and rural. Semi-rural and rural areas are now being densified, and given the changes in the requirements on new buildings, places such as London are seeing less extra densification. Does he agree that the Government should be looking at schemes such as the one up at Finsbury Park, to which the Industry and Parliament Trust will take us on a visit in the next few weeks? A post-war estate of 2,000 homes is being transformed into 5,500 homes. That is proper urban densification around a major existing transport hub, and it means that those houses are not being built in the green-belt areas that he is talking about.

[Damian Hinds]

My right hon. Friend makes an interesting point. In fact, there is a good example of that in my constituency, on a much smaller scale. Those schemes can materially improve amenity: we can make a better-looking housing estate and add facilities, such as a shop, even a pub, a better children’s playground and so on, that can benefit everyone.

Hon. Members will be pleased to hear that I am coming to the end of my speech. I do not want to overstate matters: the South Downs national park authority does build houses. In fact, it builds more houses, or plans for more houses, than other national park authorities. It co-operates and communicates with East Hampshire district council. However, we still end up with this imbalance, which is bad for both the part inside and the part outside the national park. Quite apart from the question of balance, there is also the question of public confidence, democratic accountability and responsiveness —people knowing how the numbers have been derived, rather than the council effectively having to be a number-taker, as it were, because of the decisions of another group.

My primary ask of the Minister is that he look again at how numbers are distributed between urban areas and the countryside overall. However, I also ask him to look again at how the calculations work in areas such as mine, so that we do not have demand calculated for the entire district with supply going mostly, although not entirely, to one part of it. That could be rectified in different ways. One would be to give district councils total clarity on how they can adjust their method for calculating need without running an excessive risk of the plan being found to be unsound. There is guidance—the Minister may have this in his notes—but here is what it says:

“The standard method should be used to assess housing needs. However in the specific circumstances where an alternative approach could be justified, such as those explained at paragraph 014”,

on national parks,

“consideration will be given to whether it provides the basis for a plan that is positively prepared, taking into account the information available on existing levels of housing stock and housing affordability.”

I do not know about you, Ms Jardine, but I am not sure I could explain to somebody else what that means. If we are going to have guidance, fine, but it has to be clear and it has to give confidence to councils and councillors, who, at the end of the day, are managing public money, that they are not running a serious risk of ending up in court proceedings when trying to do the right thing.

This could be done in other ways. It could be done by having the national park explicitly and transparently set a housing target for the entirety of its area, leaving the individual districts to work it out for themselves. That could be done either individually for each district, or just for the park as a whole.